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Over 8 million sellers have flocked to Amazon in hopes of turning a profit. Now, if you were a lemming, you would set up shop immediately on the assumption that all of those people couldn’t be wrong. But as a savvy businessperson, you’ve decided to ask a critical question first: Just what are the benefits of selling on Amazon?
The answers depend on whether you’re selling things that somebody else has made (such as wholesale goods or the junk from your basement) or trying to sell a product of your own.
Fully updated 4/6/2020.
The Top 3 Benefits of Selling on Amazon
1. Done-for-You SEO
Amazon is like the Wikipedia of shopping. In fact, when people want to buy something online, they're more likely to search for it on Amazon than any other site, even Google. 47% of online shoppers start on Amazon before looking anywhere else.
It also dominates search engines. Search for just about any product on Google. Type in “Harry Potter and the Sorcerer’s Stone,” “buy kitchen appliances online,” or even something as basic as “toys” and Amazon will show up on the first page.
When you build your own ecommerce website, you have to fight your way to the top of the search engine rankings. This takes months of hard work and there are no guarantees. Putting your product on Amazon gives you excellent odds of getting in front of customers from day one.
Note that you will have to do some work to compete with other Amazon sellers. Learn more in our article on Amazon SEO strategy.
2. No Website Building Needed
Designing, building, testing, and maintaining a website of your own can easily cost thousands of dollars every year. Amazon allows you to start making money without taking those risks first.
3. Customer Trust
Consumers place a high level of trust in Amazon. Search for something like “trust Craigslist,” on the other hand, and the results don’t seem quite as reassuring. Trying to sell on less heavily monitored websites like that, or on your own website, means you have to work much harder to convince the customer you’re not ripping them off.
If you’re selling a product on Amazon and you don’t have a ton of negative reviews already, most visitors will automatically trust you to deliver the product. That level of confidence is invaluable.
The Top 3 Advantages of Selling on Amazon for Product Creators
1. The Equivalent of In-Store Placement in Multiple Major Chains
Amazon ranked as the 15th largest retailer in the world in 2015. By the time 2016 rolled around, it was #12. Skip forward to 2020 and it's the 2nd largest retailer on earth.
Would you say no to having your products sold by a retailer with the distribution of Ikea? No? Amazon generates more than four times Ikea's revenues. That massive level of exposure may be the best of the advantages of selling on Amazon.
2. Bigger Margins
The average brick-and-mortar retailer uses a 50% markup, charging the customer twice the amount they pay manufacturers. Amazon’s referral fees are usually only 15% or so.
While there are other fees and costs to consider, Amazon still takes a much smaller percentage than a traditional retailer. That means you can offer your product for a more competitive price—or take home a bigger slice of the pie.
3. A Sales Record
You don’t have to sell only on Amazon. Building a sales record online proves that customers will pay for your product and makes it attractive to traditional retailers. That way, you can finally take your mom to a store, show her your product on the shelves, and convince her that yes, you run a real business.
What About the Disadvantages?
No company is perfect, and we don’t want to say that you’ll never have any problems with Amazon. Some of the challenges you might face include:
- Paying both monthly and per-sale fees.
- Seeing Amazon suddenly start stocking the product you’ve been selling and undercutting your price. (You don’t have to worry about this if you’re selling your own product.)
- Having a tough time getting the customer to notice that they had a great experience buying from you and not just from Amazon.
Should I Start Selling on Amazon?
Amazon won’t work for every business, but it’s enormously helpful for the vast majority. Here are a couple more points that we saved for the very end:
- You can use Fulfillment by Amazon to have them take care of your shipping for you—and make your product eligible for Prime.
- More than 53% of Amazon's sales came from third-party sellers in 2019.
- Most sellers who have an existing business before signing up for Amazon see their sales rise by about 50%!
We believe that the benefits of selling on Amazon far outweigh the disadvantages. It’s a low-risk way to get your business off the ground or to start making more sales quickly. If it sounds like a good deal to you, learn how to sell on Amazon or dive right in!
